IMPORTANT INFORMATION ENCLOSED

The old rusty Nail

AN E-JOURNAL FOR OLD PEOPLE

Russell Burton, an Old Person

I received a small brown envelop from an insurance company in the regular mail, what is now called snail mail.  Just above the address to me in huge bold letters was the title of this essay. Also printed on it just below my name and address was the less large still in bold capital print message, ‘PLEASE OPEN IMMEDIATELY’. Well, with all of this hype, I could not resist but to sit down immediately and find out what important information I was about to receive that I needed to know immediately.

Not surprising, it was an application for me to enroll in their life insurance plan.  Included was a table of monthly premium amounts as related to the amount of the insurance policy and age of the person to be insured.  Interestingly, the table started at age bracket 45-49 issue age.  Of course the age bracket that interested me the most was the last one 80-85.  Yes, if you are 86 years old this life insurance policy is out of reach obviously because of your age.  Now is that blatant age discrimination or what?!!!!

How lucky can I be for I am still able to buy this life insurance policy.  I have always argued that the name they give to these insurance policies is not accurate.  Simply they do not insure your life, they insure your death.

Included on the page which provided the chart with premiums and age was an outline of coverage and benefits which included 11 items all in bold capital lettering and each was enticing.  Who wouldn’t take advantage of this opportunity when it was clear that enrolling included: CASH BENEFITS; AFFORABLE RATES; NO MEDICAL EXAM; YOU CANNOT BE TURNED DOWN; COVERAGE FOR YOUR SPOUSE; COVERAGE FOR A FRIEND OR RELATIVE; COVERAGE TO AGE 100; YOUR CHOICE OF FOUR (4) BENEFIT AMOUNTS; RATES NEVER INCREASE AND BENEFITS NEVER DECREASE; AND CHOOSE YOUR OWN BENEFITS; 60-DAY FREE LOOK.  Wow, what a deal and I am still eligible!

Of course what caught my eye was I could be covered until I reached the age of 100 which of course is my goal.  But, I must act soon because in a couple of years I lose this opportunity. The explanation of this benefit starts ‘simply pay your premiums on time and your policy remains in full force and effect until age 100’.  And, when you reach the century mark they will give you a cash payment equal to the amount of your policy.  Hey you don’t even have to die!  How cool is that?

The bracket which caught my eye was the biggest at $10,000.  And, why not take advantage of this really good deal with the maximum payback to me.  Well for that insurance level the monthly premiums was a mere $166 per month and I get a 60-day free look and the rates never increase nor do the benefits never decrease.  And, I cannot be turned down. 

Under outline item 2 where affordable rates are covered I am informed that these rates are as little as the cost of a cup of coffee each day.  At my age that cost of a cup of coffee will be $5.53; what a deal.

Well, understanding that I can have this coverage until I am 100 years of age and then get my $10,000 back without even dying is a real steal and this insurance company hires math wizards to come up with these affordable rates which will obviously bankrupt the company. On the other hand, how can this be such a good deal when insurance companies must be making money to stay in business and this insurance company is a big one?

So I got out my little calculator and decided to do some figuring.  Now a premium at $166 per month adds up to $1992 each year.  In five years, I pay just under $10,000.  If I live to be 100 I get back my $10,000 but I have paid $31,872!!!! Now, I haven’t calculated the interest that this money has accrued over those 16 years.  Let’s say I invested this money at 5% I would have received an additional $12,800.  Add these numbers and what appears is the hefty sum of $44,672.  The insurance company has made a hefty $34,672 using my money.

I don’t know what it is like to live to be 100.  I suppose it is quite exciting particularly if a person is in good health.  And, to receive a check from your insurance company for $10,000 a person’s excitement at that age could be over the top.  Of course, as shown above by saving and with a simple investment of that money the check would be for $44,672!  Now that sum of money is really over the top.

Now I feel pretty healthy and my geriatric physician considers me so healthy that I need to see her but once a year instead of the usual twice a year schedule of appointments. I decided to look up on the web Actuarial Life Table published by the Social Security Department.  At my age of 83, their calculations determine that I will live another 6.65 years.  But, I may well live longer for at the age of 84, I have a life expectancy of 6.21 years.  That is at my age next year my life expectancy is reduced by only 0.44 years and that reduction is less each year I live.  Even at age 100 the table shows life expectancy to still be 2.1 years. Hey, I may never die.

I suppose someone will think about the possibility of dying a couple of months after taking out this policy with a payout of $10,000.  You may not be feeling all that chipper right then.  Well looking at the small print you will not get the $10,000 until the policy has been enforce for two years except for accidents.  During those first two years if I die all I get back are the premiums I paid plus 10%.  Not bad interest rates except I have to die to collect it.

Now looking further at this two-year exemption before I can collect the $10,000, if I die during the third year of this policy I will be paid the $10,000 but over $4000 of that $10,000 is my money which I have paid as premiums so really this is a $6000 policy not the $10,000 the insurance company claims it to be - some smoke and mirrors here?

Oh sure, I read in the obituaries everyday people dying in their early 80s but considering the population in my city of 1.4 million many of which are 80 and over most of us are staying alive.

Okay I am having fun with this insurance company about their life insurance deals.  And, this insurance company is like all the others, they provide a product but at a price.  But, should they be allowed to sell this death roll of the dice at such a high cost.  And, using their terms such as cash benefits, affordable rates, and rates never increase, benefits never decrease to entice an unknowing old person.  For many people this sounds too good to be true especially if you get excited about that whopping $10,000.  But now under closer scrutiny it really isn’t that good for in fact it is not good at all.

Of course, if someone is lucky enough to collect on their life insurance policy when they have paid less than what they get, congratulations.  Oh my, the payee is not receiving this money but the beneficiary is the person who is really the lucky guy.

Well with that happy note, I close but I must remind you about the excitement in store for anyone who buys my e-book novel on Amazon. It costs only $5.99 and is full of excitement, terror, romance, and it is a mystery.   Now this is a better deal than the insurance policies I have been writing about.  And, you don’t have to die to enjoy it. Just click on the web ‘The Old Rusty Nail’ by Russ Burton.  

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